The Best Things About Being in Debt

Debt gets a negative rap all the time, and rightfully so, no one should go out and actually thrive for a life in debt but I feel like weren’t meant to learn from it. When looked at differently, being in debt magnifies ones life and if you actually look through the glass to analyze what your life in debt is like, it’s not always bad.

I believe everything in life happens for a reason. Interpret this however you want but I truly believe in my heart and soul that nothing is put on us that we can’t handle. Though it may take years to understand, it will all make sense in the end. With this in mind, I’ve opened my eyes to see my debt-ridden world through a different set of eyes, what am I supposed to be learning about all this? Here are the best things my debt has taught me:

I’m capable of some pretty amazing things. If someone had told me I was able to accomplish what Mike and I actually have since starting this journey, I would have laughed at you. In the last two years we’ve paid off almost $40,000 worth of the debt we carried around for the previous four years. Come 2017 all of the $143,000 worth of debt will be gone. To do this we’ve made big life changes and decisions, we both hold down two jobs (we all know how time consuming blogging and freelancing is!), and we have an amazing life with our friends and family. We seriously kick ass.

I need my husband more than ever. I never ask for help. It’s a flaw I recognize in myself, I’m stubborn and until I’m at my breaking point I won’t ask anyone for help, him included. Throughout this journey though there have been times I’ve needed help with money management (my household job) and he’s delivered tenfold. The debt repayment journey has brought us together in ways other life journeys simple can’t. Money is an intimate subject for anyone, throw in a massive debt and a marriage and it can be tough.

I’ve learned I don’t need money. Ok, I need money to live obviously, but I don’t need money to have fun. We have had some amazing adventures for free or cheap that I don’t think I would have otherwise experienced if we weren’t forced into ”cheap fun”.

I can’t live without an emergency fund. The whole concept of having money in a bank account while we were in debt just didn’t make sense to me for a long time. It wasn’t until someone pointed out that if (and when) the shit hit the fan that we’d be into more debt if we didn’t have one, that we started saving one. I don’t know if we would have learned this lesson if not for the debt and my blogging ventures.

I’m learning invaluable lessons. If I wasn’t in debt I don’t know that I would appreciate money as much as I do. I’ve learned so much about money management in the last few years, because I’ve had to if I want to pay this debt off, and these lessons will be with me forever. I will also teach my daughter all the lessons we’ve learned in hopes she can avoid these mistakes.

A debt free life is worth working for. Being in debt has taught me exactly how I don’t want my life to be and for this lesson I’m thankful for it (debt). I can say we have lived through some of the toughest days we will ever experience as a married couple. Weathering this together means we really do appreciate the life we are building for our family. All too often people just wish for more, more, more but we won’t be them. We’ve lived the lowest we likely ever will (and our ”lowest” is still pretty damn good, don’t get me wrong), but it’s maintained our priorities in life. We have a realistic outlook on the life we’re building.

What has debt taught you?

Should You Have a Separate Bank Account to Budget for Your Kids?

wpid-img_20141116_133130.jpgA few weeks ago a fellow blogger, Mr. Canadian Budget Binder, did a post talking about how having a child changed their budget. One thing he mentioned was that he opened a bank account for their son where all money given to him (government funding and gifts) goes into. It’s a simple concept that I hadn’t thought of doing before.

We have a registered investment savings account for our daughter’s post secondary education (RESP) that we deposit into each month and when money is given to her as a gift, we also add to this account. I hadn’t ever considered opening a simple bank account for her though but I really like the idea. It’s a way of separating her needs from ours and thinking about it for the last few weeks, I think I will open both a chequing and savings account for her (us) to use, just for her needs.

This can be anything from new seasonal wardrobe (kids grow fast and there’s no way we’ll be able to use the same seasonal wardrobe from one season to the next!) or her dance class registration this fall. It’s a way of budgeting her life with our money. I find it’s easy to sort of forget about this sort of thing, like the fact that we need new shoes for her in a few weeks when (and IF) the snow starts melting here. With this account I can go out and buy them without impeding on our day-to-day budget.

I like the idea of her (us) having a separate savings account too for her to have access to for something other than post secondary purposes. A patient of mine was recently telling me about her daughter doing a 12 week exchange to France for her grade 10 semester. The kid was super excited as was mom because she already had the cash for her to go.

Since each child was born, she and her husband have been putting $10 per pay into a savings account incase any special opportunity came up. The rules were that it had to be something really special and something they really wanted to do, like this 12 week exchange trip experience. Their older son chose private cello lessons with an internationally known cellist. I love this idea. She said if the kids hadn’t had an opportunity it would have still be given to them to use for post secondary or alike.

Kids are so irregular with their needs having separate banking for them will be the answer for us I think. Her allowance will eventually come out of the chequing account too, and when she’s old enough, she can start to help manage them. It’s so easy to forget about all of their needs: shoes, new snowsuit, mittens ripped, dance class, wanting to try an art class…whatever it is, by us opening these accounts, trying to figure out where the cash will come from will be one less thing to think about!

Do you have separate accounts for your kids?

If You Can’t Find Balance Between Debt Repayment and Life, You Need to Earn More

wpid-img_20140804_194830.jpg

Taken on one of our weekends away this past summer

Recently, I received a really nice e-mail from a reader telling me about their success and failures with attempting to pay their debt off and how they can relate to our story. They mentioned the struggle with accepting that ”every penny” has to do towards debt and it was starting to frustrate them. In my response, I told them if they continued with the mindset that every penny goes towards debt, they’ll burn out and that they need to refocus their efforts.

Not everyone will have the same needs but the fact remains that just because we have debt doesn’t mean we don’t have other needs that are required to be met, you just need to be realistic about them. While Mike and I have put a lot on hold while we work on this debt (moving, vacations, retirement savings mostly) our lives haven’t stopped entirely. If you strap yourself too tight you’ll eventually feel the pinch and break free, going a little crazy in the process. You need to have a realistic balance.

Yes, a majority of what you earn over and above necessities should go towards your debt-free goals but that doesn’t imply that you can’t put money towards other things too.

Mike and I have monthly goals to meet for our debt-free date but we haven’t totally sucked the fun out of our lives. We have managed some (realistic) family trips, a few cheap weekends away, some nice dinners out and though details can’t be shared yet, I’m trying to plan a pretty big surprise for Mike’s 30th a year from now. First and foremost our debt payoff goal is met every month, then we prioritize the rest of our lives, which for us is family time.

If you can’t find balance between debt repayment and life, you need to earn more, it’s just that simple. While paying off debt is priority, so is your mental health. Putting too many constraints on your life will not only block the ability to learn lessons from your debt repayment journey it will stress you out. You will resent your debt and negative thoughts will enter. I know all this because I’ve been there.

I’ve attempted to live on totally unrealistic budgets which every month sets me up for failure and in turn I don’t reach my goals. Since establishing a real life budget that works, including a balance between our lofty debt free goals and our life, I’m happy. I have room for a little error. I can live.

To do this I had to earn more money, it took me a while to figure this all out but in the end it’s what it came down to. I’m eternally grateful that I have the ability to make more money and maintain this life but I’m not going to pretend for one second that it’s easy. I don’t want to work as much as I do but I have to. I know it won’t be forever and that’s enough to keep me going. Every month I’m one step closer to the life I really want. Until then I watch my pennies closely but that doesn’t mean they all go towards debt.

How did you manage your debt repayment goals and other life activities?

If You Want to Pay Off Debt, You Need To Get Uncomfortable

If you live your life constantly going the same things, it stands to reason your life will always be the same. If you’re in debt and want to get out, doing the same the doing you’re doing now, won’t work.

I know part of the reason it took us so long to ‘get real’ about our debt is because I wasn’t looking forward to doing the things I knew I would need to do to make it happen. I knew it would be uncomfortable and quite frankly, I wasn’t ready to leave my comfort zone. It took me a while to realize that the biggest results in life happen while working outside of ones comfort zone and leaving it is crucial to getting results.

The first step for us, and arguable the most uncomfortable, was actually accepting we had an issue that needed to be dealt with. We needed to sit down together and face the numbers, come up with a plan and execute it. Together being the operative word. Though we had been together for many years we had never had an in-depth conversation about our detailed financial goals. They were always very vague like ”be debt free”, ”travel” but we hadn’t ever figured out what we had to actually do to accomplish these goals.

Finding out I was pregnant was the push we needed. Suddenly our lives were drastically changed and we needed to make changes now. There’s no way I could afford to stay on maternity leave living the way we were.

I won’t lie, it sucked. I hated making some of the changes we were now required to do if we wanted me to stay home and be with our daughter for the planned 12 month maternity leave. Pushing ourselves to the max limit of our comfort zone was exactly what we needed though. Being forced to live the way we did for the year ($220/month grocery budget for example), was hard. Uncomfortable is an understatement but we learned so much from the experience.

I know with real effort we can live on less than $300 per month for groceries (for 2.5 people). Living in the area that we do I consider this a huge feat. Though I have increase this budget a bit since returning to work, I learned what we can do when needed. You don’t know what you’re capable of until you try. The other thing we needed to do was make more money somehow.

For a few different reasons I opted to return to work four days per week post maternity leave. Our lives now revolve around me having Monday off but if I was going to cut one day per week from our income, we needed to make up the shortfall somehow if we wanted to reach our goals. Mike and I opted to do this through our online ventures and me working more when I’m at work. My day per-maternity leave included an hour long break in the day. I chose t eliminate the hour break and stick with 30 minutes only- adding two additional hours per week to my pay cheque.

Another aspect of being uncomfortable is putting parts of our lives on hold. We really want to travel. There is nothing we could use more right now that a vacation- an honest to God break with relaxation but we simply can’t take the time off work nor can we afford to drop $2,000+ on a vacation right now.  I know it is coming but for now we need to wait, I know it will be worth it.

Shaking up your routine and making the unconformable changes that are necessary to become debt free aren’t fun but so worth it when the day comes and your balancing owing is at zero.

What was the most uncomfortable aspect of your debt-free journey?

Frugal Fitness: FitBit Edition

wpid-screenshot_2015-02-12-23-28-16-1.pngI mentioned last week that a few family members received FitBits for Christmas and I also (finally) jumped on the bandwagon I had been thinking about for a while, and got one too. I do well with competition and was intrigued when I saw my sister-in-law spend an entire Friday night on my treadmill in an attempt to beat her aunt in a work-week challenge. I wanted in on it!

After I decided that I would be buying one I had to decide which one of the FitBit line was for me.

I immediately ruled out anything I had to wear on my wrist. I have a hard time wearing a watch so I knew permanent wearing something would drive me crazy. This narrowed my options down to the FitBit One, for $99 and the FitBit Zip for $59.

The One has the advantage of containing a rechargeable battery, a screen that you can see your stats, clips onto clothing, measures steps/kCals burned/distance/floors climbed and sleep patterns.

The Zip is similar to the One except that it is a little smaller, comes in multiple colors (if that’s your thing), runs on watch battery and does not measure floors climbed or sleep patterns. Since none of these ”extra” things (sleep and floors climbed) interested  me, I opted for the cheapest option at $59 and bought the Zip.

I knew I wouldn’t be able to stand sleeping with something ”on” me so that feature was irrelevant to me. Also, I have a 2.5 year old daughter, I know my sleep is total crap, I don’t need to be reminded. I also don’t really care about floors climbed, though it would be sort of cool to see how many floors I climb in a day I’m not curious enough to pay the extra $40. I wanted the basic features of the glorified pedometer that needed to compete!

I knew I was going to have fun with this little device but I had no idea how powerful it would be. I’m not exaggerating when I say it rules my life. I wake up, get dressed and immediately clip it on me (you can wear it where ever you want, I like the middle of my bra since it’s totally discrete and more out-of-the-way than my pants). I must get my step count it every day. Maybe it’s my type-A personality but I can’t stand going to bed knowing I haven’t met my goals for the day. Huge bonus being since starting this fitness challenge I’ve lost almost six pounds.

Though I think I would do well without any competition, it definitely helps (and is crazy motivating) to have ”friends” who are participating in challenges against each other. I keeps me moving for sure!

If you’re looking for a little motivation to move I can’t say enough good about the FitBit, at less than $100 it’s much cheaper than a gym membership too :)

Wasted Money: Valentine’s Day Edition

Gift my daughter sent me last year since Mike and I don't celebrate ;)

Gift my daughter sent me last year since Mike and I ”don’t” celebrate ;)

I am a total scrooge when it comes to Hallmark holidays like Valentine’s day. It just seems like such a colossal waste of money. I don’t scoff at those who opt to celebrate it, but for me I’d rather save the money and not stress about appreciating my spouse because I’m told to.

Kids have forced a whole other wrench in my plans though. I can’t very well send my daughter to daycare on Friday without Valentine’s treats to give to the other kids at their little party. I’m thankful that there are only three other kids there because my Lord, this crap is expensive!

I took kiddo to an insane asylum WalMart this weekend to pick out a box of pre-made Valentines to give out. The first aisle we approached had pre-boxed cards for $10 per box. $10 got you TEN cards with pencils. Cheap aside, I was not interested in wasting $10 for a piece of paper that would either be ripped before the kids went home that day or promptly thrown in the garbage by their parents later that week. And sharp pencils for two to three year olds who can’t even write yet? Not happening.

Before we left the house, Mike showed me a picture in flyers of a $2.00 box of cards, I never found the ones advertised but we eventually settled on a $3.00 box for something like 20 cards- now we’re talking. With 20 cards, her daycare friends were taken care of as was ”daddy, nanny, baby-baby (her doll)…” and every other person she could recall to her memory. $2.00 I could handle.

Knowing this week was going to be busy with me working five days, Mike travelling and more snow impending (putting a wrench in my commute), I knew I needed to buy treats rather than make something for the kids. I consider myself pretty crafty, and with time can pull together some fun party treats but it wasn’t happening this week. Instead, I opted to buy each kid a box of Valentine chocolates. Two Reese hearts in a cute box for $1.00 each. Done.

As I was throwing the three required treats in the cart, Maria is quick to remind me that she needed one, so did her daycare teacher and what if so-and-so was there? “What then mommy?!” My $3.00 treat find turns into $8.00. Then she found something she insisted on buying herself daddy. Ok, fine. If she wanted to buy her dad a little treat that was fine, this kid gets over-the-moon excited about any celebration so who was I to damper it? In went the $5.00 bag of chocolates plus a card for daddy…

At the end of the trip, where I projected to spend about $5.00, I ended up spending $22. To me, it’s mostly wasted money but I know kiddo will have a blast giving out her special treats on Friday and that eases the pain a little.

Do you celebrate Valentine’s day? How much will you spend?

The Real Problem With Student Loans is Not The Loan Itself

Student loans are always a hot topic. Everyone has an opinion on them, especially students who have opted to take them out. Every few months I’ll see or hear about a local rally about student loans, the cost of education, increasing fees etc. Today I’m here to defend student loans*.

This week one of these rallies took place. Like most other, it started at the university registrars office and moved its way through town to the a local government house. When I left work the street was littered with posters noting facts about student loans and stating ”Grants, Not Loans”. For more reason than one, it really got my blood boiling.

Here’s the thing, if you can’t ”afford” to go to post secondary, don’t. It’s not the government’s fault that you opted to pursue an education with no plan in place to use the education and then no backup plan to repay the loan should your education not provide intended employment. A student loan is a vehicle to allow one to pursue a privileged education for those who work hard enough to gain acceptance into a qualified institution. It is not ”free money”, or a grant, which is non-repayable funds. It is a loan to allow you to pursue the education of your choice and requires repayment regardless of the academic path you choose.

Knowing that a loan needs to be repaid, choose your post secondary path wisely. Ideally one that will further you professionally and not wind your ass back at the minimum wage job you held through high school. If you want to study sociology**, that’s cool but have a plan in place to pay the loan back once you finish your education.

After the rally, a local newspaper ran a piece about it. One girl was quoted as saying with being $12,000 in debt she could ”barely afford to be in school right now”.

$12,000.

Assuming her post secondary doesn’t further her job prospects anymore (and I would ask why waste the money if it doesn’t) and she’s stuck making minimum wage ($10.40/hour, here) if she really wanted to make it work that loan could be paid off. But it wouldn’t be easy, not by a privileged North American girl standard. She obviously has minimal understanding of her potential financial situation if she can’t see just how possible it will be for her to repay the $12,000 loan.

People borrow the money and act all surprised when the government comes looking for repayment.The problem is that people want it all and want zero accountability for it. Not everyone has what it takes like Jordann did. She made the tough decisions required to pay off her $38,000 worth of debt. She certainly didn’t want to move home and live in an itty bitty house but she did and in two years killed every last red cent.

A student loan can be an amazing opportunity if you allow it. Though I have a lot of debt I’ve never once blamed the cost of tuition or my loan issuers for my financial problems. I chose the institution knowing the costs involved. I knew, despite my growing debt, a day would come when I would need to repay it. I borrowed the money and am eternally thankful that it allowed me to pursue the education that it did. Now I’m taking the ownership and paying if off.

The government doesn’t give handouts. You can’t just ask the government to issue a grant instead of a loan. Very few people and post secondary opportunities are actually worthy of grants if you ask me. Loans are meant to be respected. Tuition will continue to increase, especially at top rated universities. If you want to be taught by some of the best in the world you’re going to have to pay for it. Base your decision around this, and don’t complain about the cost if you choose one of these institutions.

Borrow the loan, use it responsibly (learn how to budget and no trips south for spring break) and pay it off! Don’t borrow the money if you can’t come up with a ”worst case” plan either because the fact is that when you’re done schooling the loan needs to be paid off regardless.

 

* Please note that I am in Canada and so can only speak from  my understanding and experiences of Canadian issued loans. I have no understanding of the US or any other international system of student loan issuing.

** Not hating on sociology students, just an example. It was actually one of my favorite subjects, but didn’t pursue it because I couldn’t see how I would benefit from it as an educational path.

January 2015 Life and Debt Repayment Updates

wpid-20150105_235318.jpgI cannot believe it is February already. Mind blown.

January was, overall, a good month for me. First off, the Canadian World Jr. hockey team won Gold on home soil so there’s that.

This was the first month I felt good in over two months. Whatever cold virus that is going around this year kicked my ass. It started as a standard cold in November never really clearing up until a few weeks ago. It was brutal.

A few of my family members got FitBits for Christmas, a device I’ve been on the fence about buying for over a year. I hadn’t bought one (opting for a simple pedometer instead) but when they got one, I caved and also bought one too. I don’t know where it’s been all my life but my God it works (for me). This tiny little device (I went with the Zip) rules my life. All of us compete in a work-week competition (seven of us total) and it really gets me moving. We’re a competitive group and it really motivates me. Since January 5th I have managed to lose 5.4 lbs and I totally attribute it to this little thing. Loving it.

Mike’s birthday was last week and I managed to pull off a surprise party that was a lot of fun. For a dude who’s impossible to surprise, and needs to be involved in every detail of every plan (he’s a professional project manager, can’t blame him), I was quite happy the way things fell together. It was a low-key night of just hanging out but considering he thought he’d be spending his birthday watching hockey with his wife and sister, eating take out, he was more than happy to have our house full of his best friends.

I only missed one day of work due to weather (a blessing after last year’s insane winter and subsequent lost income) but because I picked up a few extra shifts it shouldn’t affect us too much, I’m still going to attempt to pick up some extra writing gigs to help off-set the day of lost work though…I do have goals to meet after all!

Speaking of goals, January was a huge month for us. We took out a consolidation loan in November 2012 in the amount of $23, 698.70.The anticipated pay-off date was April of 2017. I’m happy to report that as of today it is sitting at $8,984.00 We’ve paid off 62% of the loan in just over two years. Of these two years, I spent the remaining eight months of my maternity leave so most of the hard work has been done in the last 16 months. When I wrote this post outlining our goal of paying off $70,000 worth of debt in next three years, I projected we’d have this loan paid off in October of 2015 and so far, so good, we should meet this date (19 months ahead of schedule)!

Given how fast time goes (again, where is January?) I’m excited. I hate wishing time away but paying off debt is super exciting!

How did everyone else do in January? Anyone need some writing help? I know a girl who can hook you up! #shamelessplug

** In my rush to get this published I forgot to add that we managed to pay off $2,225 worth of debt in January!**

The Frustrations of Expensive Work Costs While Living on a Budget

wpid-img_20130830_100750.jpgCertain careers have more rigorous professional requirements. Mine is one and certain parts of it drive me crazy. I sometimes feel like there is a lot of money grabbing (rather than true professional development) going on and while living on a budget it can be especially frustrating.

I make pretty good money. I’m not complaining about my income, especially since receiving a raise just a few months ago. My frustrations are not directly with my employer rather my professional (national and provincial) work associations. In order for me to be able to work I have to pay an annual licensing fee of $630.00 (and increasing every year). It wouldn’t matter if I worked one hour per week or 50 hours per week. We’re all required to pay the same fee. Annoyance number one.

I understand it costs money to run national and provincial regulating bodies. I’m also required to maintain one million (plus) of malpractice and liability insurance which is covered within these fees. For me and my (near) full-time job I realize it’s an expectation for me to be able to work. What irks me is that on top of my $630 annual fee, I am required to attend many continuing education courses.

Again, I totally understand that I work in an industry where continuing education is important and expected. Some courses are free but most are not. I have a three-year cycle where I need to complete a certain number of credits in varying areas (example: some on professionalism, some hands-on stuff). Not only are most not free, most are quite expensive. This year alone, I’m looking to spend about $500 more for courses on top of my licensing fee. This is a good year. Just under $1,200. If I do not complete these courses I cannot work, I have no choice.

I attend all the free or super cheap ones that I can but I’m maxed out. I’m now in the process of registering for courses that cost $150+ (some upwards of $2,500). The most annoying thing is that most of these expensive  courses are on topics I have zero interest in and honestly believe will provide me with a skill set I will rarely, if ever, use. When I inquired with other professionals (in my field) about getting a large quantity of points, their suggestion was to attend one of the national conferences. These are literally held on the other side of the country and would cost thousands of dollars for me to attend, especially while on a budget, this is NOT happening.

I’ve started saving additional money for my continuing education but these are funds I won’t get back. CRA (Canadian revenue agency) is getting strict about what is considered a work-related expense and more and more courses are not allowed for tax credit. It is literally money out of my pocket I can’t get back. Some courses I gladly pay for as I really enjoy the subject but I would say 70% of ones I am or will be registered for are of zero value to me. I’m completing them for no reason other than points. Wasted money?

How do you deal with variable work expenses in your budget??

Detoxing Your Budget

I’ve never been a big spender. I’d watch friends go on monthly shopping sprees and wonder how they’re doing it. We had similar incomes, if anything I had an advantage with the added income from my husband, but I certainly couldn’t afford to go shopping like they did as often as they did. As an adult I have never been in a situation to just spend.

Before we got real about budgeting and financial control to pay our debts off our finances were all over the place. I simply had no control over the money coming in and out. Even though we make significantly more now, our disposable income was probably better than given we were renting and not homeowners, but we never seemed to have much ”fun money”.

In the past three years, since we’ve become serious about paying our debt off, we don’t have much disposable income by choice. While I can now see how friends of mine may have been able to go on monthly shopping trips, I also see how they weren’t maximizing their financial potential (student loans, mortgages, vehicle loans). Though I didn’t know it at the time, I had essentially forced my budget onto a detox.

Given that I’ve never had an opportunity to really spend money, to this day, I don’t. Long term I can only see how this would be a good thing. Detoxing ones budget is like a dietary detox. Cut out triggers.

Clothes, gadgets, shoes, books.

Whatever it is, stop buying it. After a while the urges will go away and you’ll gain a real perspective on what you really do and do not need.

For me, the little disposable income I did spend was often on home things, decorations and DIY supplies. I would get an idea in my head and before I know it, drop $50 on supplies for a half-thought out plan. I really love doing things around the home but once I put myself on a self-imposed detox I gained a lot of perspective.

It was during this detox that I started a blog, something that feeds my creative side way more than my half ass attempts at DIY anything. Detoxing our finances allowed me to gain real perspective on our spending on what and when we really need things. For years ”complete kitchen backsplash” was on my priority to-do list, often ahead of things like ”pay off student loan”. Though I’d like to eventually do this, it is so not a priority, though it would look nice, I can certainly live without it!

Some people go on spending fasts, no-buy months. But for me it’s too generic. I know my triggers (books, home stuff, kids stuff). By not buying anything of any given category for a certain length of time, it realigns exactly what my needs really are (recognizing that kiddo doesn’t need another dress, I want it only because I think she’d look awfully cute in it, therefore we don’t buy it). Not buying things I think I want was how I learned the rule: If you have to justify a purchase, you probably don’t need it. Something I still live by.

Do you recognize your spending triggers? How do you avoid them?